Liquidity Pool#

The mSOL/SOL liquidity pool enables instant unstaking and provides LP opportunities.

Overview#

Marinade operates an mSOL/SOL liquidity pool that serves two purposes:

1. Instant unstaking - Users can swap mSOL → SOL immediately
2. LP rewards - Liquidity providers earn trading fees

How It Works#

graph LR
    A[User wants instant unstake] --> B[Swap mSOL for SOL]
    B --> C[Pool provides liquidity]
    C --> D[User receives SOL immediately]
    C --> E[LP providers earn fees]

Instant Unstake Flow#

1. User requests instant unstake
2. Pool swaps mSOL for SOL
3. Small fee charged (~0.1-0.3%)
4. User receives SOL immediately

Fee Structure#

Fees vary based on pool liquidity - higher utilization = higher fees.

Providing Liquidity#

Why Provide Liquidity?#

How to Add Liquidity#

import { Marinade } from '@marinade.finance/marinade-ts-sdk';

// Add liquidity (SOL only - converted to balanced position)
const { transaction } = await marinade.addLiquidity(
  1_000_000_000 // 1 SOL in lamports
);

Removing Liquidity#

// Remove liquidity
const { transaction } = await marinade.removeLiquidity(
  lpTokenAmount // LP tokens to redeem
);

LP Token#

When you provide liquidity, you receive LP tokens:

LP Token Value#

LP tokens represent your share of:

• SOL in the pool
• mSOL in the pool
• Accumulated trading fees

Value increases as fees accumulate.

Pool Dynamics#

Price Impact#

Large swaps may have price impact:

Utilization#

Pool health depends on utilization:

graph TD
    A[Pool Balance] --> B{Utilization}
    B -->|Low| C[Low fees, easy swaps]
    B -->|High| D[Higher fees, larger impact]
    D --> E[Arbitrage rebalances]
    E --> A

Impermanent Loss#

Why IL is Minimal#

mSOL/SOL pools have minimal impermanent loss because:

1. Price correlation - mSOL tracks SOL closely
2. Predictable ratio - mSOL only appreciates vs SOL
3. No divergence - Unlike volatile pairs

IL Calculation#

Since mSOL/SOL ratio only increases:

IL Risk = Very Low

The mSOL/SOL rate goes up ~7-8% per year (staking rewards), which is predictable and gradual.

MNDE Incentives#

LP providers may receive additional MNDE rewards:

1. Liquidity Gauges - MNDE holders vote to direct emissions
2. Incentive Programs - Periodic reward campaigns
3. Governance Participation - Vote on gauge weights

Check Governance for current incentive programs.

Comparison with External Pools#

Use Cases#

For Users#

• Instant unstake - Exit mSOL position immediately
• Arbitrage - Profit from price differences
• Convenience - One-click unstaking

For LPs#

• Yield - Earn trading fees
• Low risk - Minimal IL exposure
• Support - Help Marinade ecosystem

FAQ#

Next Steps#